entrepreneur

Access to capital is said to be the lifeblood of any business venture. Do you really have a viable company if you can’t finish the job after getting a contract? This can come up when we are contacted about factoring but they do not actually have invoices yet. The problem they go on to describe is a job half finished but not enough money to finish.

This is a classic example of an undercapitalized venture. Every new business must have enough capital to get started. Furthermore they need continuing ongoing funds to sustain and grow the business. Unfortunately factoring accounts receivable is not the right tool to get a start-up started from scratch. Get some customers, finish an order, then we can talk.

Depending on what your business is, you might need one or a combination of the following; borrowing from friends and family, seed or angle investment capital, credit arrangements with suppliers, SBA small business loan, or a small line of credit from a bank where the owner signs personally for the repayment.

Most of the time businesses fail due to lack of capital. Money is absolutely critical for all companies, insuring your access to it will reward you with success.

Going back into the archives, here is a page of old posts on the Network Solutions website that is called Grow Smart Biz. Since most of the material is still very relative to the Ins and Outs of Factoring, it would be terrible to ignore this material. With all the noise and clutter there remains quality information available for entrepreneurs. Please enjoy these posts for posterity. I hope it will prove helpful.

Once a serial entrepreneur, always one – Kirill Sheynkman has a blog Passionate Intensity where he is writing a series about getting through the Venture Capital process. It’s a chain of blog posts that illuminates both the view of the investors and what should be expected from the entrepreneur. The first installment is called “Getting funded: Step 0, Prepare.” Having experience on both sides of the table Kirill is well placed to describe what to expect. You can continue the thread of posts at the bottom of each one. Since it is still ongoing, be sure to bookmark where you leave off. You may also follow him @sheynkman

Bank financing might not be the only option to funding a company in growth mode. Although banks usually offer the lowest cost of capital, it comes with strings that may very well inhibit this growth in certain situations. If a company starts small and goes big in a very short period of time, a bank is not set up to handle what they would consider extreme or fluctuating revenue growth.

Other sources of capital may include;

1. Sales â€“ There is no better way to capitalize a company than sales and profit. Increased sales with healthy profit margins is the premium method to build a company. But along with more revenues comes the equally as important skills to apportion cash flow where it is needed.

2. Customers â€“ Giving customers terms for early payment and having internal processes to keep those payments timely is another great way to fund a company. Many businesses do not get invoicing out quick enough and focus on collections well enough to help with their growth.

3. Suppliers â€“ Building credit with suppliers is another cost effective way to utilize cash flow in order to maintain a strong growth curve. By applying for credit, making timely payments and over time asking for credit increases, a company can get positive input on the radar of credit reporting agencies.

By the time you have optimized these sources well enough, considering other resources may be beneficial. Financing the purchase of equipment through leasing is a good way to spread the payments over time. Depending on the business model, in certain situations where the upside of the growth potential is attractive enough, selling equity in the company by way of angel or venture funding may be available. This avenue is, in a relative sense, costly in the long run and extremely difficult to obtain.

Mobilization capital is money up front to start a contract. This type of capital is only available from commercial sources to companies with a good strong balance sheet who have been operating for many years and have a positive history of performance both with what they do, and who they do it for. But if a company can get the contract started, then the possibility of receivable financing becomes available. Also known as factoring invoices, a business may get an advance today on an invoice that will be paid by a customer 30 â€“ 40 days later. The benefit is the business can pay its bills now and continue to grow based on the creditworthiness of their customer, in this case the government.

The object is to think creatively about funding a business and to utilize the most efficient tool for each situation.

Jason Baptiste writes at OnStartups.com about the joys of doing a startup. To many, taking the plunge toward owning your own business is daunting. It takes a certain type of individual to master the art of starting a company. The risks are incredible but the rewards are boundless. Somewhere in the middle you’ll find most hard working entrepreneurs struggling to make a go of it. On Startups has tons of great resources for people who are thinking about putting a great idea into action. All the basics apply; have a good plan, make sure beforehand that somebody (or lots of bodies) want it, don’t try to start without a plan to raise capital. Remember, after knocking on every door, if not a single person agrees you have an idea and a plan that will work, you better check your expectations.

Here’s Jason;

This post has been ruminating with me for a while. It’s not a sudden “a-ha” moment that made it form, but a collective group of “a-has!” over the past few months. Consider this the uplifting post to counter last week’s “The 11 Harsh Realities Of Entrepreneurship”. Just because it’s a harsh reality, doesn’t mean you shouldn’t be an entrepreneur. The best time to start a startup is not tomorrow, not next week, and certainly not next year. The time is right now, at this very second. Â Here’s why:

A great resource for companies who are just getting going is Startups.com. With tons of information by seasoned entrepreneurs, this is a great place to learn the how-to’s of starting a business. Today they posted this article;

There’s always talk about the end game in the form of an acquisition, funding announcement, or eventual flame out. Hollywood has even made a movie about the founding of Facebook that glamorizes startup life instead of showing what it really is: a day in day out marathon of work with very little glamor. We rarely hear about the harsh realities that entrepreneurs face and the journey that this entails. This isn’t meant to be a downbeat and negative article, but actually quite the opposite. By knowing the harsh realities that lie ahead, you can be prepared when they come about so you can solider on. Here are some of the harsh realities that come with the territory of being an entrepreneur.

Interested to read Tom Weithman, Managing Director of the CIT GAP Fund on what the investor community is looking for when considering a potential investment. In this particular case he is speaking specifically about the individual. What does the entrepreneur bring to the table and why is it important to the investor? 11 character traits that will go a long way to gaining the confidence of a future capital partner. Read the entire blog post here.

Flexibility, reliability, and dedication are the main ingredients to pursue when considering a source for your financing. Look no further than the steady growth and dependable service CCA provides all our clients. Click here to learn more.